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Peso GS Weekly: We prefer short- to medium-term bonds
We recommend taking advantage of the rally to reduce exposure in long-term peso government securities.
By Geraldine Wambangco and Metrobank Local Currency Trading Department
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WHAT HAPPENED LAST WEEK
The peso government securities (GS) market started the week on a defensive tone ahead of the 7-year auction.
On Tuesday, the Bureau of the Treasury (BTr) partially awarded the reissuance of Fixed Rate Treasury Note (FXTN) 20-17 at an average of 7.058% and capped the high at 7.18% to award PHP 27 billion of tendered bids. Had it been fully awarded the amount, the high would have reached 7.40%.
Selling interest on medium- to long-term peso GS emerged after the auction, as yields rose 5 to 10 basis points (bps). Coming from the Labor Day holiday last May 1, market appetite finally improved, as better buying interest was seen from both dealers and investors.
The move lower in US Treasury yields added to the buying interest as yields eventually closed 10-16 bps lower. Th